How to start building business credit, Decoding net 30 accounts. Business credit also referred to
as corporate credit is credit, that is obtained in a business name. With business credit the business
builds its own credit profile and credit score linked to the business EIN number not the owners
Social Security Number. With an established credit profile and score the business will
then qualify for credit. The credit is in the business name and based on the business's
ability to pay, not the business owners. Since the business qualifies for the credit when
done right, business credit is obtained with no personal credit check required from the business
owner. And, the business owner isn't personally liable for the credit the business obtains.
Every highly successful business has business credit. This is how the largest privately and
publicly owned companies obtain credit and capital to grow, without the CEO or
owner needing to personally guarantee the credit and financing but even startups
can obtain the same type of credit it's just about understanding the proper steps.
Business credit provides a lot of exclusively unique benefits. For one, a credit
profile can be built for a business that is completely separate from the business
owner's personal credit profile. This gives business owners double the borrowing power
as they have both personal and business credit profiles built. Business credit can
be built quickly, business credit scores are based only on how the business pays its bills.
A business must first get approved for initial credit, usually from vendors. Once
credit is approved the business uses the credit to make purchases once invoiced if
the business pays the invoice quickly it immediately is issued a high credit score.
Here you can see real business credit reports, as you can see when you have even 1 or 2 accounts
reporting that are paid as agreed scores can go from very low to very high in a short period of
time. All that's needed to establish high business credit scores are some accounts reported that are
paid as agreed. When it comes to credit businesses have a much greater need for higher
capacity than a consumer does. This is why approval limits are much higher on business
accounts versus personal accounts. Per SBA credit limits on business cards are usually 10 to 100 times
higher than consumer credit. Here are some recent approvals you can typically get approved for new
vendor credit with limits of $500 to $2,000 immediately. You can then get store credit cards with limits of
$5,000 and higher within a couple of months and within 90 to 120 days you can receive approvals
of $20,000 $40,000 and even higher. Apple $7,500 and $12,500 Universal fleet $4,500 when done
correctly business credit can be built without a personal credit check and without putting your
Social Security Number on an application there won't be any inquiries put on your consumer credit
report. Business credit can quickly be obtained regardless of personal credit quality and there is
no personal credit reporting of business accounts, and your credit utilization won't affect your
consumer FICO score because your business accounts only report to the business reporting
agencies. Most business credit can be obtained without the owner taking on personal liability or a
personal guarantee. This means in case of default the business owners personal assets can't be
pursued. Business credit also increases the value of your company and because credit gives you a
competitive advantage. Almost any business can get business credit as long as it has an EIN number
and entity set up. You don't need collateral, you don't need financials, you can be a start-up. Personal
credit quality doesn't matter, you just need to know the proper building steps. It's important to
know that anyone can pull your business credit reports without your permission. Clients prospects
potential buyers even competitors can see your business info. This means they can see
your payment history high credit limits employees and Revenue past payment performance and much
more. All lenders and credit issuers also review your business credit reports to determine if
you'll be approved or denied, the rates and terms you'll pay, and how much you'll get approved for.
Here you can see the recommendations of credit from several companies by Experian, and you can
notice how companies that have been in business for years are being recommended for smaller
amounts of credit, while other newer companies have higher credit recommendations because they
have more established business credit. Check out some real business credit approvals so you'll know
what's possible with business credit. Here you can see an $8,000 approval from Chase, here's another
$15,000 approval from City, here's another $10,000 approval from Chase a $7,000 bank approval,
here's another Chase approval for $22,000. Know that we've talked about what business credit is and
the benefits it provides. Let's talk about trade credit and how it's used to initially start your business
credit profile. Vendor credit is sometimes referred to as trade credit. This type of credit is extended
from one trader to another for the purchase of goods and services. Trade credit facilitates
the purchase of supplies without immediate payment trade credit is often used by business
organizations as a source of short-term financing. Trade credit is the largest use of capital for a
majority of business-to-business sellers in the United States, for example, Walmart the largest
retailer in the world has used trade credit as a larger source of capital than bank borrowing trade
credit for Walmart is eight times the amount of capital invested by shareholders, trade credit is
the second-largest source of capital for Walmart retained earnings is the largest. Trade credit is
usually offered with terms including net 10, net 15, net 30, net 60 these forms of trade
credit specify that the net amount is expected to be paid in full and received by the seller
with him at 10,15,30, or 60 day time period. The word net in this sense means total after all
discounts an example includes a company such as Quill letting you purchase items on a net 30 term
you make the purchase using your credit and are given an invoice with net 30 terms, this means you
have 30 days from the data services are rendered or your items are shipped to pay your balance
in full minus any discounts, so if you purchased $100 worth of office supplies you need to pay back
the $100 within 30 days of your items being shipped legally speaking net 30 means that you as
the buyer will pay the seller on or before the 30th calendar day including weekends and holidays of
when the goods were dispatched by the seller or the services were fully rendered transit time is
included when counting the days if you pay after that 30-day period you'll typically be charged
interest for not meeting the terms if you pay late you'll also damage your business credit scores if
the account reports to a business reporting agency net 30 terms are the most popular form of trade
credit net 10 and net 15 terms are widely used as well especially with contractors and service
oriented businesses net 60 terms are not as common due to the longer payback term but are
sometimes issued, now let's discuss how to use trade credit to build your business credit. Trade
credit is very popular in the United States but the millions of vendors who issue credit over 97% of
them do not report to the business credit reporting agencies when using trade credit to build your
business credit profile it's essential you find vendors that will give you credit without a personal
credit check report your credit to the business credit reporting agencies the first step to using
trade credit and vendors to build business credit is to find sources who will give you credit for
your business, even if you have no credit reporting now most major retailers will offer an EIN credit
in your business name only but only a very small few will issue you this credit if you
have no business credit established already unless you're willing to provide a personal guarantee or
credit check if you do use your social security number when applying, the vendor will pull your
personal credit and an inquiry will be placed on your personal credit report then both your
personal and your business credit will be used to make the approval decision you'll also be
attaching a personal guarantee so in the case of default, your personal assets can be pursued
to obtain vendor credit without a personal credit check or guarantee you'll need to find trade
vendors who will give you credit for your EIN even when you have no established credit now once you
find these senders it's essential to make sure they report the credit to the business reporting
agencies the vast majority of vendors don't do this so the credit issue then won't help you build
your corporate credit vendors who will give you credit when you have none reporting now and
report to the business reporting agencies are very rare they're so rare that when you do find them you
may need to buy some items you normally wouldn't buy from sources, you wouldn't normally buy from
these sources in return provide you massive benefits including taking a risk in issuing you credit
even though you have no track history helping you ease cashflow giving you trade lines to
help you establish initial business credit once you get your credit with vendors use the credit
and pay the bill the account is reported to the business reporting agencies some vendors report
credit weekly others report monthly and others may report quarterly it's a great idea to ask vendors
when and how often they report so you know what to expect one of the easiest and most useful
vendors you'll find to help build business credit is Quill, Quill sells office supplies and many other
useful products for businesses they offer net 30 terms, and will approve you even as a start-up you
should order $50 or more to have your credit reported to Dun & Bradstreet they review
your D&B and Experian reports and may require a couple of initial purchases first if you have no
credit-reporting now to get approved with quill visit their website www.quill.com and select $50
or more worth of items and place them in your shopping cart go to the checkout and choose
to open an account select to be invoiced, and do not enter your credit card information upon
checkout you'll be notified by email that you are not approved or that your item has been shipped.
Uline is another great starter vendor that offers shipping and packaging supplies they
issue net 30 terms and report your credit to D&B they will want you to have your DUNS number from
Dun & Bradstreet before you apply they will ask for three references upon enrollment you may need
to prepay for your first couple of orders before you get approved, to get approved with Uline
visit their website at www.uline.com select the invoice and do not enter your credit card
information upon checkout, you'll be notified by email that you are not approved or that your item
has been shipped. Grainger is another great starter vendor Grainger sells industrial supplies they
issue net 30 terms and report to D&B Grainger is notorious for offering nearly all applicants
a $1,000 line of credit you must apply with them by phone at 800-323-0620.
Seton will issue net 10 terms to businesses that have no prior established business credit they
sell all types of safety signs labels asset tags first-aid kits and thousands of other products
may report your credit to D&B visit www.seton.com and put items in your cart that you want to
purchase go to checkout and choose to open an account select to be invoiced and do not enter your
credit card information upon checkout you'll be notified by email that you are not approved or that
your item has been shipped. Gamplers is a leading provider of work supplies and offers over 35,000
different products may issue net 30 terms and report to D&B you must order $50 or more of items
to have your account reported to get approved call 800 382-8473 and ask
for a credit application complete your credit application but leave the Social Security field
blank you'll get a notice by email or phone that you've been approved within 48 hours. Gamplers
is one of the hardest of these vendors to get approved with they will typically want you to have
some type of credit already established before they'll approve you they are also the only one
mentioned that requires you to complete a paper application and they are one of the only sources
that actually ask for your social security number even though you don't have to provide it to them
you'll need to get credit with at least five vendors to have enough trade lines
to start getting revolving credit in most cases remember you must pay your bill on time or early
for your credit to get reported you have to pay it after the invoices issued that's when
the net term starts if you pay it before that you won't get credit on your business reports
pay your bill promptly after receiving your invoice most sources will let you
pay online or by phone using a checking account or other credit card allow 30 to
90 days for your credit to report 60 days is the average time for credit reporting.
You can obtain your business credit reports directly from Dun & Bradstreet Experian
and Equifax commercial your scores directly reflect how you pay your bills and 80 Paydex
from D&B literally means you pay your bills prompt or on-time a 90 small business risk
score from Equifax literally means that you pay is agreed, so always pay early or
on time once five accounts are reporting to D&B Experian and Equifax combined you can
then start getting credit with most stores you can then grow your credit to qualify for Fleet
credit, Cash credit cards and auto vehicle financing. Contact us today to learn more